The new proposal brings a solution postulated in 2019. This new solution could get applied to DLC contracts in Bitcoin.
Bitcoin keeps going through more upgrades, and this time a proposal aims at improving the way of spending bitcoins (BTC) deposited in a contract.
Smart contracts have been lurking around Bitcoin for years. They do not count on the complexity of the contracts that operate on the Ethereum network, but they give some payment conditions that show how the BTC will get spent.
Among these cases, users can see the pay-to-contract (P2C) or payment to the contract. With P2C, a contract sets up its procedures between the payer and the receiver under a public signature. According to the policies of this contract, both parties can corroborate that the payment happened successfully just by presenting their public key.
However, to meet a completion for this payment, the receiver, who owns the payment’s UTXO, needs the hash of such transaction and his private key to spend the BTC. In a new proposal brought by Maxim Orlovsky, the hash adheres to a partially signed transaction (PSBT) that will permit the process of creating the transaction inside the P2C contract and its signature to get along in separate ways.
The proposal gets rooted in a postulate made by the programmer Andrew Poelstra aiming at the P2C optimization for payments in 2019.
The most prominent benefit of this improvement resides in security and privacy. With payment through a P2C contract and allowing PSBT signatures. Users can also spend the BTC acquired, and sign with hardware wallets without the need to put the private key in danger.
This improvement is, at the time, only a proposal under debate. This proposal does not appear on the list of Bitcoin Improvement Proposals or BIPs yet.
In the BIP procedures, right after the starting point of the discussion, a draft gets considered and adhered to the list of proposals. This proposal subsequently receives approval or it simply gets rejected and forgotten by the community. If it gets approved, a soft fork would appear and set up its procedures to achieve its final implementation in Bitcoin.
Smart Contracts in Bitcoin are Becoming More Complex Now
P2Cs are not the first smart contracts that work on Bitcoin. Last year, news came to light about how, through discreet logging contracts, oracles gained the ability to operate within the network. These oracles could range from sports betting systems to trading BTC futures contracts.
It is worth considering that smart contracts are the foundation stone for the operation of decentralized finance. Unlike Bitcoin, Ethereum brings the creation of complex contracts due to its language. However, with Taproot, the Sapio programming language also came to light, which could bring up chances of seeing more complex DeFi platforms in Bitcoin.
Leading programmer in the Bitcoin ecosystem, Jimmy Song, has spoken about how Taproot could activate improvements by conditioning how BTC got spent.
By: Jenson Nuñez
